ID :
189049
Thu, 06/16/2011 - 14:14
Auther :
Shortlink :
https://www.oananews.org//node/189049
The shortlink copeid
Home, auto loans to become costlier as RBI hikes key rates
Mumbai (PTI) - Be prepared to pay more every month
on your home, auto and other loans, as the Reserve Bank of
India on Thursday, for the 10th time since March, 2010, raised
key interest rates by 25 basis points in its effort to control
spiralling inflation.
The RBI has raised the short-term lending (repo) rate by
25 basis points to 7.50 per cent and the short-term borrowing
(reverse repo) rate will move up by a similar margin to 6.5
per cent. It kept other rates and ratios unchanged.
The mid-quarterly policy initiatives, the RBI said, are
expected to contain inflation, which is currently over 9 per
cent, much above the comfort level of the central bank.
"The RBI has sought to maintain an interest rate
environment that moderates inflation and checks inflationary
expectations," the Finance Ministry said in a statement,
adding that this was on expected lines.
"We need to have price stability for sustaining growth in
the medium term," it added.
Bankers said the move would put pressure on interest
rates and may make loans costlier subsequently.
"It (RBI's move) will put pressure on short-term deposit
rates and subsequently on the lending rates. But rate hike by
banks would not be immediate," Indian Overseas Bank CMD M
Narendra told PTI.
While announcing the measures, the RBI said that
tightening of the monetary policy would impact economic
growth, which is already under pressure, in the short term.
With the rise in the repo rate, the interest rate for the
additional lending facility of the RBI under the marginal
standing facility (MSF) has gone up by 25 basis points to 8.5
per cent. This facility was introduced in the annual policy
that was unveiled on May 3.
The monetary policy stance, the RBI said, "remains firmly
anti-inflationary, recognising that, in the current
circumstances, some short-run deceleration in growth may be
unavoidable in bringing inflation under control."
The economic growth rate in the fourth quarter of the
last financial year decelerated to 7.8 per cent from 9.4 per
cent in the same period a year ago, raising fears of a
slowdown.
Also, industrial production during April, 2011, moderated
to 6.3 per cent from over 13 per cent in the same month last
year.
The moderation in growth has not deterred the Reserve
Bank into taking a pause on its rate hike strategy, as the
"challenge of containing inflation and anchoring inflation
expectations persists".
"Thus, while the Reserve Bank needs to continue with its
anti-inflationary stance, the extent of policy action needs to
balance the adverse movement in inflation with recent global
developments and their key impact on the domestic growth
trajectory," the RBI said.
Pointing out that the inflation is at an uncomfortable
level, the RBI said the present wholesale price figures
"understate the pressure because (domestic) fuel prices have
yet to reflect the global crude oil prices."
on your home, auto and other loans, as the Reserve Bank of
India on Thursday, for the 10th time since March, 2010, raised
key interest rates by 25 basis points in its effort to control
spiralling inflation.
The RBI has raised the short-term lending (repo) rate by
25 basis points to 7.50 per cent and the short-term borrowing
(reverse repo) rate will move up by a similar margin to 6.5
per cent. It kept other rates and ratios unchanged.
The mid-quarterly policy initiatives, the RBI said, are
expected to contain inflation, which is currently over 9 per
cent, much above the comfort level of the central bank.
"The RBI has sought to maintain an interest rate
environment that moderates inflation and checks inflationary
expectations," the Finance Ministry said in a statement,
adding that this was on expected lines.
"We need to have price stability for sustaining growth in
the medium term," it added.
Bankers said the move would put pressure on interest
rates and may make loans costlier subsequently.
"It (RBI's move) will put pressure on short-term deposit
rates and subsequently on the lending rates. But rate hike by
banks would not be immediate," Indian Overseas Bank CMD M
Narendra told PTI.
While announcing the measures, the RBI said that
tightening of the monetary policy would impact economic
growth, which is already under pressure, in the short term.
With the rise in the repo rate, the interest rate for the
additional lending facility of the RBI under the marginal
standing facility (MSF) has gone up by 25 basis points to 8.5
per cent. This facility was introduced in the annual policy
that was unveiled on May 3.
The monetary policy stance, the RBI said, "remains firmly
anti-inflationary, recognising that, in the current
circumstances, some short-run deceleration in growth may be
unavoidable in bringing inflation under control."
The economic growth rate in the fourth quarter of the
last financial year decelerated to 7.8 per cent from 9.4 per
cent in the same period a year ago, raising fears of a
slowdown.
Also, industrial production during April, 2011, moderated
to 6.3 per cent from over 13 per cent in the same month last
year.
The moderation in growth has not deterred the Reserve
Bank into taking a pause on its rate hike strategy, as the
"challenge of containing inflation and anchoring inflation
expectations persists".
"Thus, while the Reserve Bank needs to continue with its
anti-inflationary stance, the extent of policy action needs to
balance the adverse movement in inflation with recent global
developments and their key impact on the domestic growth
trajectory," the RBI said.
Pointing out that the inflation is at an uncomfortable
level, the RBI said the present wholesale price figures
"understate the pressure because (domestic) fuel prices have
yet to reflect the global crude oil prices."
